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Playing behind closed doors: Newcastle United FC v The Premier League

09/04/2021

Locations

United Kingdom

This case shines a light on the inner workings of the Premier League and highlights the risk that a dispute can be made public against a party's wishes, notwithstanding the confidential context of an arbitration.

Introduction

Two advantages of arbitration are the ability for parties to have a say in the choice of the arbitrator(s) for the tribunal, and the confidential nature of the process.

Both of these issues were tackled in the recently reported judgments in the case of Newcastle United Football Company Ltd v The Football Association Premier League Ltd and others [2021] EWHC 349 (Comm), and [2021] EWHC 450 (Comm).

Playing from left to right and firmly on the offensive, Newcastle United Football Company Limited (Newcastle) took on The Football Association Premier League Ltd (PLL), by challenging the appointment of Michael Beloff QC as the appointed chair of the arbitration tribunal formed to rule on a disputed decision of PLL. 

Newcastle also argued that the court application should be held in public, and that the Court's decision should be published without redaction

The pre-match build up

Under PLL's Rules, which governs the relationship between Premiership football clubs and PLL, there are stringent tests which can operate to disqualify a legal entity or a person from becoming a director of a club (known as the Owner's and Director's Test).

In the summer of 2020, the current owners of Newcastle sought to sell their shareholding to PZ Newco, a company ultimately owned by a Saudi Arabian wealth fund called Public Investment Fund (PIF).

PLL wrote to Newcastle to set out that, as it considered PIF was ultimately controlled by the Kingdom of Saudi Arabia (KSA), PLL was minded to conclude that KSA would also be classified as a "Director" pursuant to the definitions in Section A of PLL's Rules.

The effect of such a conclusion would mean that KSA would need to be considered under the Owner's and Director's Test. This was disputed by Newcastle, consequently triggering the present arbitration.

Lord Neuberger and Lord Dyson, the nominated arbitrators of Newcastle and PLL respectively, jointly appointed Mr Beloff QC as chair of the three-person tribunal (the "Chair"). Although there were no initial objections to the appointment, Newcastle subsequently requested that the Chair recuse himself on the basis of doubts as to his impartiality. 

When Mr Beloff QC refused to step down, Newcastle applied to the High Court for his removal.

Crying Foul: the Claim for a Section 24 Removal

Newcastle relied on section 24 of the Arbitration Act 1996 ("AA 1996"), which allows a party to arbitral proceedings to apply to the court to remove an arbitrator (here, the Chair) on a number of grounds, including that, "circumstances exist that give rise to justifiable doubts as to his impartiality."

Newcastle relied upon the following four circumstances in support of its application:

  1. that the Chair had previously advised PLL on Section F of PLL's Rules in 2017;
  2. that the Chair had been an arbitrator in twelve arbitrations in which PLL's solicitors were involved and in three of such arbitrations the Chair had been appointed by PLL's solicitors (although two of those arbitrations came after the Chair's appointment in Newcastle's arbitration);
  3. that the Chair failed to disclose the provision of advice and the previous appointments before PLL's solicitors disclosed the same; and
  4. that the Chair subsequently privately communicated with PLL's solicitors following Newcastle's request that he recuse himself from the arbitration panel.

PLL contested the application. 

Final Score

HHJ Pelling QC confirmed that the applicable test to be applied to claims of apparent bias under s24 AA 1996 is that set out in Porter v Magill [2002], namely that the issue is, "whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased".

HHJ Pelling QC concluded that whether viewed in whole or in part, the factors identified by Newcastle would not lead a fair-minded and informed observer, having considered all the facts, to conclude that there was a risk of bias. Newcastle's Section 24 challenge therefore failed.

In rejecting the claim, HHJ Pelling QC addressed each of the four circumstances raised by Newcastle. Notably, the Judge made the following comments:

  • The advice provided by the Chair in 2017 in relation to Section F of PLL's Rules was not related to the issue in dispute between Newcastle and PLL;
  • The Chair's other appointments would not lead to the conclusion of bias in and of themselves, or in the Chair's failure to disclose them. The appointments had not been made by PLL, they did not relate to the relevant proceedings, the non-disclosure was not inconsistent with IBA Guidance, and the Chair was not financially dependent on work from PLL or its solicitors;
  • The Chair had not been appointed by the parties themselves, but rather by the parties' two chosen arbitrators.  This appointment was made more than three years after the provision of the Section F advice, and the non-disclosure could not be the basis for a real possibility of bias;
  • The majority of the private communications were uncontroversial – they concerned the Chair seeking permission from PLL's solicitors to explain the content of the advice on Section F and to have sent this to Newcastle's solicitors may have breached confidence. An email from the Chair to PLL's solicitor asking whether PLL had a position on his recusal was "an error of judgment [which] ought not have occurred” but nevertheless did not create a real risk of bias.  It was noted that the emails with PLL's solicitors were written under time pressure and were mainly concerned the Section F advice, and that the Chair had made it clear he was content for all private emails to be shared with Newcastle's solicitors.

 HHJ Pelling QC also rejected the application under CPR 62.10 to hear the claim in public.
He was not persuaded to depart from the default position under CPR 62.10(3)(b) that arbitration claims should be heard in private.

In rejecting Newcastle's application, HHJ Pelling QC noted that the case, "is from beginning to end a private dispute between private parties in relation to private contractual arrangements, powers and duties and is not and never has been a public law dispute."

However, Newcastle successfully argued that the decision should be published in un-anonymised and un-redacted form. In reaching this conclusion, HHJ Pelling QC discussed the balancing of public interest and arbitral privacy, and the principles in relation to publication set out by Mance LJ in City of Moscow v Bankers Trust Co [2004].

Specifically, HHJ Pelling QC noted that there was an inherent public interest in publishing a judgment determining a Section 24 application, "in maintaining appropriate standards of fairness in the conduct of arbitrations". Further, PLL had failed to identify any significant confidential information in the judgment or provide evidence of detriment it would suffer through publication, with relevant details relating to the dispute having already been published in the public domain.

Post-match debrief

This case is interesting not least because it shines some light on the inner workings of the Premier League and the various competing interests involved in the context of a football club takeover.

Newcastle's application, to have the section 24 challenge heard in public and the subsequent publication of the judgment, highlight the risk that a dispute can be made public against a party's wishes, notwithstanding the confidential context of an arbitration.

Nevertheless, arbitral parties can take comfort in the fact that the decision to publish an un-redacted and un-anonymised judgment was driven, in part, by the fact that there was no significant confidential information included in the judgment which was not already in the public domain.

In relation to the Section 24 challenge, although the merits of applying to court to remove an arbitrator inevitably turn on the facts of an individual case, HHJ Pelling QC's judgment confirms the threshold for proving apparent bias is a difficult one to meet.

Following the guidance set out in Halliburton v Chubb [2020], the case is a reminder to practitioners and parties to arbitrations that challenges under Section 24 require a well-rounded review of all the facts and circumstances that form part of the objective assessment of potential bias.

While a Section 24 challenge remains a valuable tactical weapon, particularly in relation to the threat of publicising the arbitration, parties must be consistently live to issues of disclosure and confidentiality in relation to arbitrator appointments.

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